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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Thursday, 13 September 18
SUPRAMAX: INDO-INDIA COAL RUN WAS FIXED CLOSE TO $16000 ON ULTRA - FEARNLEYS
Capesize
Rates took a further drop in the beginning of the week, to later find a floor around mid-week reaching mid USD 7 level for c5 and just ...
Thursday, 13 September 18
SHIPPING IS INCREASINGLY CAUGHT IN THE TRADE WAR LINE OF CROSSFIRE - PETER SAND
Once again, the already long list of tariffed goods has been made even longer. Many more commodities were hit on 23 August, but September is likely ...
Wednesday, 12 September 18
THE INTERRELATIONSHIP BETWEEN LETTERS OF INDEMNITY AND CHARTERPARTY "TIME BAR" PROVISIONS - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Introduction
A recent English Court of Appeal decision provides important guidance on the applicability of charterpar ...
Wednesday, 12 September 18
IS LNG POISED FOR A NEW GROWTH CYCLE? - WOOD MACKENZIE
Gas needs to work for its long-term sustainability. But the mood music is upbeat. Just 18 months ago the LNG market was depressed, anticipating an ...
Wednesday, 12 September 18
U.S. TOTAL COAL EXPORTS TO BE 107 MMST IN 2018 AND 101 MMST IN 2019 - EIA
EIA forecasts U.S. coal production will decline by 1% to 768 million short tons (MMst) in 2018, despite a 10% (10 MMst) increase in coal exports.
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- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
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